Advertisement

Japanese car makers change tack in China

Kazunori Takada and Norihiko Shirouzu Guangzhou and Beijing

CHINA’S car buyers are growing up, with a more discerning view on the bang they want for their buck, and that could help Japanese vehicle manufacturers recover in a market where sales have been battered in protests over disputed East China Sea islets.

While Nissan, Honda, Toyota and Mazda count the cost of lost sales and dented profits from a violent anti-Japanese backlash in September, industry experts say now is the time to strike deeper into the world’s biggest car market rather than limp away and lick their wounds.

Paul Gao, a Hong Kong-based researcher at US consultancy McKinsey, said the damage to Japanese brands should prove to be a “temporary phenomenon” as tensions were heightened in the run-up to this month’s 18th Communist Party Congress, China’s once-in-a-decade leadership change.

“Over the medium to long term, the Japanese [market] share in China will recover because for customers, especially those buying cars with their own money… the nationality of the brand is not a major consideration, whether it’s Japanese, South Korean, whatever.

“In the end, they think about performance, styling, fuel economy and safety,” Gao said, adding it would be a mistake for the Japanese to shift focus away from China.

He said the Japanese should now be “doubling their efforts” to win back Chinese market share from Volkswagen, General Motors and Hyundai, as more drivers were getting around to replacing their cars.

“For their first car, as they had no ownership experience, they gravitated towards flashy cars and were impressed by advertising and sales campaigns.

“Now they are looking for something more rational: quality, safety, durability, areas where Japanese brands like Toyota excel,” he said.

Demand for leading Japanese car brands in China virtually halved last month, cutting Japanese firms’ market share to 17 percent from 19 percent at the end of August.

Blaming the China impact, Nissan, the most exposed of the three big Japanese car makers to China, cut its full-year net profit forecast by 20 percent, while Honda also revised down its forecasts for the year by the same margin.

Toyota, also badly hit in China, managed to raise its annual profit forecast as it is less exposed to that market.

China accounts for 27 percent of Nissan’s total vehicle sales, a fifth of Honda’s sales and 12 percent of Toyota’s global sales.

Mazda said yesterday that it expected its China car sales to fall by more than a third this month from a year earlier, dragging fourth-quarter sales down by around 40 percent, but the firm’s China chief, Noriaki Yamada, hoped China would be back to “business as usual” by the end of March next year.

Speaking on the sidelines of the Guangzhou car show in China, Yamada said Mazda was also changing tack on the way it marketed its brand in China, preferring a more direct and personal touch than traditional mass media advertising. – Reuters

SHOW ALL
Advertisement